Jones v. Levering ( 1906 )

BLAND, P. J.

(after stating the facts). — 1. The present insolvency of the Pindells is conceded; whether or not they were insolvent in December, 1902, is not made clear by the evidence. Levering’s testimony tends to show that they were solvent at that time. That he believed they were solvent is shown by the fact that he sold his crop of wheat for that year to them on credit, taking their individual note for the purchase price ($2,'200) of the wheat. The evidence shows that they were unable to keep their mill going during the year 1903, that they run it spasmodically, and early in 1904, were compelled to shut it down for want of funds to1 Jceep it in operation. It is shown by the evidence that the Farmers & Merchants Bank had been furnishing them funds to run the mill for a period of about thirty years, and evidently had confidence in their honesty and ability to pay until sometime in the year 1903, when the bank must have lost faith in their ability to run the mill on a paying basis and withheld further advances to them, and on August first proceeded to make certain its lien for the payment of the twenty-five thousand dollars note by taking a new note and deed of trust and placing the deed upon record.

Plaintiff in respect, to the conversation had by him and Cash with Levering, in December, 1902, stated:

“We went to Mr. Levering’s bank and Mr. Levering .went into the back room with us and we asked him the question about the financial standing of the Pindells, and he said they were all right, and as evidence to prove to me and to Mr. Cash that they were all right, he says: ‘They owe me $2,200,’ and he had their note for $2,200, That’s the only thing that he said. I was perfectly easy then. He didn’t say one word about that being all the debt that they owed. But he said that they were all light and solvent. He made no written statement as to their solvenc'y. The $2,200 indebtedness which Mr. Levering mentioned was indebtedness to him, Levering individually. Mr. Levering did not at that time make any statement about the Pindell Bros, being indebted to the bank in the sum of $25,000 nor did he say anything about the bank holding a deed of trust on Pindell Bros, real estate to secure that amount.”

Gash stated that previous to this time he had learned in some way from some one in banking' circles that the Pindells were largely indebted to the Farmers & Merchants Bank, that they were “indebted to the limit.” Plaintiff’s evidence does not show that Levering gave him any assurance or guarantee as to the actual financial condition of the Pindells, in December, 1902. Plaintiff did not ask for details or particulars. His evidence shows that he only asked Levering for his opinion and that he got it; for it is not shown that Levering did not speak what he believed to be the truth, on that occasion, therefore, there is no room to hold that Levering purposely misled the plaintiff or induced him to extend credit to the Pindells. Plaintiff’s evidence is, that he relied upon Levering’s opinion. He did not ask for a written statement or guarantee of the financial condition of the Pindells. He did not put himself in an attitude to hold Levering good for any representations or statements he might make with respect to the solvency of the Pin-dells ; had he done so, Levering, in all probability, Avould have refused to give any such guarantee. On this branch of the evidence, plaintiff has shown no equities against Levering or the defendant bank, although he SAVore he was induced to extend credit to the Pindells on the strength of what Levering said in regard to their solvency.

2. Plaintiff’s evidence substantiates the allegations of Ms petition, in respect to the manner in which wheat was bought by him as the agent of the Pindells at Frank-ford, and shows that their indebtedness to him (reduced to judgment) accrued in the manner described in Ms petition. He offered no evidence whatever tending to show that there was any understanding or agreement between the bank and the Pindells, or either of them, whereby the first deed of trust should be withheld from record. Both the Pindells swore there was no such agreement or understanding. Levering testified that there was no such agreement or understanding and that the bank was at liberty to put the deed of trust on record at any time, if it had deemed it necessary. He further testified that the note was taken in the first place as collateral security for the payment of a number of smaller notes which the Pindells owed the bank; that the bank examiner had suggested that the bank should have some sort of security from the Pindells and that the note and deed of trust were taken,-not on the direct suggestion of the bank examiner, but for the purpose of satisfying him; that the officers of the bank did not think it necessary to place the deed on record as they had confidence in the honesty of the Pindells and did not believe they Avould give a second deed of trust; that the-bank had carried the Pindells for years and nearly all their indebtedness was to the bank and that these facts were generally known in Hannibal, and that Cash, the cashier of the Frankford bank, had been told of the existence of the unrecorded mortgage, either by himself or the cashier of his bank. Cash testified that he knew, in a general way, that the Pindells were largely indebted to the defendant bank but he had no recollection of ever having been told of the existence of the unrecorded mortgage. Plaintiff testified that he never heard of the unrecorded mortgage until after the second one had been given and recorded for over four months, too late for him to proceed against the Pindells in bankruptcy.

It is well settled law that the withholding of a mortgage from record, at the request of the mortgagor or in pursuance of 'any agreement or understanding between the mortgagor and mortgagee, operates as a fraud upon persons who deal with the mortgagor and give him credit upon the supposition that the property which he appearently owns is unincumbered, and this is so, although there is no actual intent to defraud any one. [Bank v. Buck, 123 Mo. l. c. 156, 27 S. W. 341; Bank v. Doran, 109 Mo. 40, 18 S. W. 836; Wall v. Beedy, 161 Mo. 652, 61 S. W. 864; Bank v. Frame, 112 Mo. l. c. 515, 20 S. W. 620.]

In the case of Bank v. Buck, supra, there was no evidence that the deeds were withheld from record on account of any agreement, but there was evidence, and it was found as a fact by the court, that it was believed to put the deeds upon record would injure the business of the grantors. On this evidence and evidence that the grantors obtained large credit on the supposition that they owned the property conveyed by the unrecorded deeds, the court found that the deeds were withheld from record for a fraudulent purpose. There is no such evidence in the record before us.

In Bank v. Newkirk, 144 Mo. 472, 46 S. W. 606; Walsh v. Chambers, 13 Mo. App. 301, and Wall v. Beedy, supra, it was held that the mere fact that a mortgage is kept from record is not sufficient evidence of fraud.

The mere fact of keeping a. mortgage from record is but a link in the chain of evidence to show fraud; to complete the chain and establish fraud, other facts and circumstances tending to prove fraud must be linked in it. There are no such other facts or circumstances shown in the record before us, hence the allegations of fraud in plaintiff’s petition were not proven. The learned circuit judge so found and we have no hesitancy in adopting his findings.

The judgment is affirmed.

All concur.